EFFECT OF NATIONAL DEBT ON NIGERIA’S ECONOMIC PERFORMANCE
Keywords:
Domestic Debt, Economic Performance, Foreign Debt, Gross Domestic Product, National DebtAbstract
The study investigated the effect of national debt on the economic performance of Nigeria from 1981 to 2023. The specific objectives were to assess the effect of domestic debt and foreign debt on the gross domestic product of Nigeria. In line with the ex-post facto research design adopted, secondary data were gleaned from the statistical bulletin of the Central Bank of Nigeria for various years, over a forty-three year period that spanned from 1981 to 2023. The Ordinary Least Square regression used in hypotheses testing revealed that: domestic debts have a positive and significant effect on the gross domestic product of Nigeria (p-value = 0.0000) while foreign debts have a significant but negative effect on the gross domestic product of Nigeria (p-value = 0.0086). In conclusion, effective management of both domestic and foreign debt is essential for fostering economic growth and stability. The study recommended that attention should be given to the composition and use of national debt to ensure that domestically borrowed funds are directed towards productive investments that stimulate economic growth. It was also recommended that policymakers should be cautious about increasing foreign debt levels and should ensure that such debt is used for projects that enhance economic resilience and generate sufficient returns to service the debt.